Self Adjustment of ST of Credit Note against Current ST Liability., Service Tax

[Pratyush Parashar]

Dear Sir,
A Company having centralization registration with service tax department issued a Invoice in FY 2012-13(June'12), for which company received payment also, but due to deficiency in service company has to issue a Credit Note in the FY 2013-14 for Amounting Rs 900,000 + ST.
Shall company self adjust the service tax portion of the issued Credit Note with the current ST Liability? Please Explain.
Regards,

Pratyush.

Posts / Replies

[Pradeep Khatri]

Notification No.3/2012 - Service Tax

Adjustment  of excess paid service tax:

sub-rule (4B), the following sub-rule shall be substituted, namely:-

"(4B) The adjustment of excess amount paid, under sub-rule (4A), shall be subject to the condition that the excess amount paid is on account of reasons not involving interpretation of law, taxability, classification, valuation or applicability of any exemption notification.";

[Saju Philip]

That you have raised the bill for full amount and paid tax on the full amount. But you were paid the bill as reduced by Rs 9.00 lacs + ST by the client. I am right. 

According to me your case falls under Rule 6(3) which read as follows:

"(3) Where an assessee has issued an invoice, or received any payment, against a service to be provided which is not so provided by him either wholly or partially for any reason, or where the amount of invoice is renegotiated due to deficient provision of service, or any terms contained in a contract the assessee may take the credit of such excess service tax paid by him, if the assessee,
(a) has refunded the payment or part thereof, so received along with the service tax payable thereon for the service to be provided by him to the person from whom it was received;
(b) has issued a credit note for the value of the service tax not so provided to the person to whom such an invoice had been issued.”

Your case falls under Rule 6(3)(b), {attention is invited to parts shown in bold}and you are entitled to adjustments against current liability.

regards

CS Saju Philip